Moa Beer is a Con

Having last October described its New Zealand distribution deal with Treasury Wine Estates as “the perfect partner to super-charge growth”, the company came out last week and blamed TWE for its failure to hit the prospectus sales volume target of 195,100 cases this year.

The shortfall would be big, 30 per cent, implying sales of about 136,000 cases in the 12 months to March 2014. Investors were naturally spooked and the shares were gutted by more than a quarter.

I can’t believe that there were seriously suckers out there that would invest in this dog of a company. Moa is the Enron of beer. While it has a good distribution network (I’ve seen it on sale in my local supermarket here in San Antonio), it’s completely priced out of the market. Nobody is going to pay eleven bucks for that crap.

For eleven bucks, my beer had better actually come from a Trappist monastery in Belgium, be bottle fermented, and taste like God’s nectar. Moa beer does not meet these requirements. It is a bog standard craft brew which tastes nice enough, but nothing special that can’t already be gotten for half the price.

There seems to be no effort on Moa’s part to either make beer, or brand their beer, so that it is actually competitive in the marketplace. The whole point of Moa, in fact, seems to be to have a product that looks flashy so that investors will part with their cash. It seems to me to be nothing more than a Ponzi scheme. The goal is not to make beer and sell it at a profit. The goal is to run a company, get investment, and look like you are doing something to justify that investment by putting overpriced bottles on as many shelves as you can.

Eventually Enron Beer is going to run out of money, and some people are going to lose their shirt. But nobody should pretend that anything about this is actually about selling beer.

42 Below was a little bit different. The goal there was, initially at least, to make a good quality indigenous New Zealand spirit product, which nobody else was doing at the time. There was a definite gap in the market. They also made South Gin, which I enjoyed drinking in considerable quantity. It’s only when they floated and “went global” with it that the fraud began in earnest and it stopped being about shifting product.

Moa, on the other hand, has no genuine place in the market – the target market is already drinking better beers for cheaper. There are only so many brands Geoff Ross can palm off to Diageo. Nobody is going to pick up Moa like that. It’s a dog.

Blair you are much more charitable than I am. Regardless of the quality of the product I see 42 below in the same light as the others. A whole heap of hype and then sale of the company for a nice capital gain, even though it wasn’t profitable before being sold off.

Mate. Why would you knock people for having a go at a new business in NZ? As an alleged free market champion (read ACT party) surely you would applaud Moa. You should know that it’s not all plain sailing in a startup business. Go and buy some of that Moa off your local supermarket shelf, chill out and be a patriotic Kiwi.

I am a free market champion, which is why I buy a six pack of (Oregon) Deschutes Mirror Pond beer for $8, rather than spend $11 on a four pack of glorified Moa lager. That is the market at work. Or if I want a good lager, I will buy Michelob for $6.75, or even Lone Star for $4.90 for a six pack. All good beers, equal in quality to Moa, but cheaper and more competitive. If I was in NZ I would buy Macs, which is a million times better than Moa. Or if I wanted a genuine craft experience I would buy something from the Emersons range – they make fantastic beer that is worth the premium price. True patriotism supports Kiwis who make good beer for its own sake, not companies that use beer to raise capital.

I am not into corporate welfare or charity. I put it to you that the owners of Moa are not trying to compete with those beers, they are trying to bullshit so that you will buy shares. That’s not the market, that’s not capitalism, that’s playing the market for suckers. If you love Moa so much, you buy it, but know that it’s the equivalent of handing spare change out your window to traffic light bums, or paying bank fees for Nigerians with millions of dollars tied up in inaccessible accounts.

The purpose of the stock market is to raise capital for business expansion. That’s what Moa did. What do you think they want to do other than grow the business? There’s no gain for the managers/founders if it doesn’t work. Also it seems that you think that if a business becomes valuable it becomes a fraud?? No wonder ACT imploded. And for those other beers to be a million times better they must be pretty damn good.

Have you heard of Enron? They did all the things you describe, but there was one problem: They weren’t actually adequately selling a product people wanted to buy. Ultimately, if your business is not doing this it is a fake business. It exists to raise capital in the hope that someone else, somehow, will bail them out. In Moa’s case, their ultimate goal is an acquisition by Diageo or some similar multinational, before their bubble bursts. If they actually were in the beer business they would make better beer, and sell it for less money. You know, like all the other craft breweries out there.

All the other beers I mentioned are excellent, yes. And I don’t know why you keep mentioning ACT. Other than seven weeks helping Kenneth Wang in Botany in 2008, I haven’t been an active member of that party for eight years. Ironically, my view then, as it is now, is that they were selling politics the way Moa now sells beer…

Enron were energy traders. Middle men. They didn’t make anything. Not a reasonable comparison. Plus they were actuaI fraudsters and criminals. I mention ACT as I read your bio and you appear proud of your association. If that’s not the case, maybe we agree on something. They are a spent force. It’s also a big assumption that Moa or 42 Below were designed to never make money and get palmed off to some unsuspecting corporate. If you’d started 42 Below and you got offered $100m plus – wouldn’t you take it? Of course you would. And why not, that’s capitalism at work. And on Moa, someone had to buy for it to be on your supermarket shelf in Texas. As an attendee at their AGM I know that they will sell over 100k cases this year. So someone is drinking it. And if they don’t that’s also capitalism at work. What drove me to respond to you are off the cuff remarks like yours that fuel the great Kiwi knocking machine. We should be proud and aspirational.

I was also going to make the comment that 100k cases sounds like a lot – if you are talking about the NZ market only, but if you are distributing in the US as well, it suggests very poor sales. I have no idea how many stores they are in, but even in a not unreasonable estimate of 2000 stores nationwide, they’re only selling about one case per store per week!